Sectors Shares

Pick N Pay Holdings Limited - Audited Results For The 52 Weeks Ended 2 March 2014

Release Date: 15/04/2014 07:06
Code(s): PWK
 
Wrap Text
Audited results for the 52 weeks ended 2 March 2014

Pick n Pay Holdings Limited
Registration number: 1981/009610/06
JSE share code: PWK
ISIN: ZAE000005724

Results for the 52 weeks ended 2 March 2014


Clear plan delivers improved results
Review of operations
Key financial indicators


                                                                                                                    
                                                             Normalised                                             
                                                                trading                              As             
                                                               calendar    Comparable        previously             
                                                               364 days     pro forma          reported             
                                             364 days      (pro forma)*             %          368 days         %   
                                                 2014              2013       change*              2013    change   
  Total till sales                      R73.0 billion     R67.8 billion           7.6     R68.5 billion       6.5   
  Turnover                              R63.1 billion     R58.6 billion           7.7     R59.3 billion       6.5   
  Gross profit margin                           17.5%             17.5%                           17.4%             
  Trading profit                     R1 008.1 million    R749.8 million          34.4    R850.5 million      18.5   
  Profit before tax                    R830.9 million    R706.3 million          17.6    R807.0 million       3.0   
  Basic earnings per share                60.61 cents       49.87 cents          21.5       57.03 cents       6.3   
  Headline earnings per share**           68.83 cents       47.95 cents          43.5       55.11 cents      24.9   
  Total annual dividend per share         44.30 cents                                       40.78 cents       8.6   
 * The Group implemented a 52-week financial reporting calendar in February 2013. The 2014 financial year consists 
   of 364 trading days of turnover and related gross profit, compared with 368 days in the prior year. Reviewing 
   turnover and gross profit on a comparable 364-day basis is more meaningful and as such, the results in this 
   commentary are presented on a comparable pro forma basis (unless otherwise stated). For a detailed explanation 
   on the new financial calendar and its impact on the comparability of performance, please refer to note 2 of the 
   summarised financial information presented below.                                                                                    
 **The difference in the growth in headline earnings per share against basic earnings per share is the exclusion 
   of profits and losses of a capital nature in the calculation of headline earnings. Capital losses net of tax 
   of R42.5 million are added back to headline earnings in 2014 (mainly comprising the impairment of intangible 
   assets), against a deduction net of tax of R9.9 million of capital profits in 2013.                                                                                    



The Group has delivered an improved financial performance compared to the previous year,
substantively delivering on the objectives set at the beginning of the year.

The Group increased turnover by 7.7% (compared to 6.2% the previous year). This was driven in part
by an accelerated programme of new-store growth. Like-for-like growth was subdued at 2.7%,
reflecting the difficult trading environment across the sector. Customers are facing increasing financial
pressure as a result of rising fuel, electricity and other utility costs, rising interest rates and
levels of household debt. The weak rand is also contributing to rising commodity and consumer goods
prices.

The gap between Pick n Pay’s growth and overall market growth narrowed from 2.5% in the previous
year to 0.7% this year.

Strong financial control is crucial in this environment. The Group’s improved financial
performance reflects in large measure the encouraging progress made over the past year in reducing cost
through greater organisational and operating efficiency and tighter fiscal control across the business. 
We reduced our trading expenses as a percentage of turnover from 17.1% to 16.7% and our trading profit
margin improved from 1.3% to 1.6%.

The increase in turnover and reduction in trading expenses has delivered headline earnings per
share which are up 43.5% on a comparable pro forma basis. The total dividend per share for the year 
is 44.30 cents, up 8.6% on the prior year, in line with the Pick n Pay Stores Group’s policy to 
moderate the dividend cover to 1.5 times headline earnings per share.

Our strategy remains that of customer-focused and sales-led growth. Lower costs will enable us to
invest more in our shopping trip, driving turnover growth by consistently improving our product
offer, stock availability and customer service.


Clear plan: delivers stronger operations
We are a stronger business than we were 12 months ago. We are better positioned to strengthen and
grow our core South African business, and actively explore new strategic opportunities in the rest
of Africa.

Despite the more challenging trading environment, the Group grew at every level, serving more
customers than last year, in more stores and with higher value baskets.

The Group opened 111 new stores during the year and closed 26 under-performing stores, adding 3.4%
net new space. We grew our Pick n Pay and Boxer brands across a variety of retail formats, ranging
from stores which serve lower-income communities through to our new Waterfront store in Cape Town.

We are particularly proud to be serving some communities for the first time, including Chatsworth,
KwaMashu and Hammersdale, which demonstrates the strength and inclusiveness of our brand. We are
under-represented in the market that our Boxer brand serves and we look forward to expanding our
footprint in these areas. The Group now has 1 076 stores, comprising 643 company-owned stores and 
433 franchise stores, across multiple retail formats and six southern African countries. In addition 
52 stores, three of which trade under the Pick n Pay brand, are operated in Zimbabwe by our associate, 
TM Supermarkets. Our franchisees remain crucial partners in our business, exemplifying the Pick n Pay
commitment to excellent customer service and we are grateful to each of them for their hard work and
entrepreneurship over the past year.

We are keenly focused on improving the quality of our fresh and perishable produce and our
pre-packaged convenience ranges, and are seeing good results in these areas. We are experiencing good
growth in our smaller convenience formats, reflecting the growing customer desire to shop more often 
in locations which are easy to reach. While our larger Hypermarket stores remain under pressure, we 
are implementing plans to improve the customer offer and experience in each individual Hyper. Our
general merchandise team has made good progress in rationalising and focusing our general merchandise
range. This will have a positive impact across the business, particularly in our Hypermarkets. Our
smaller clothing and liquor formats continue to perform well and make meaningful contributions to the
turnover and profit growth of the business. We will introduce expanded and targeted clothing ranges
into our supermarkets next year. We have grown our online food delivery business by 27% over the year.
We now serve more than 2 000 customers per week, and have extended the service during the year
within the Western Cape, KwaZulu-Natal and the Free State.

Customers are more engaged than ever in our smart shopper loyalty programme, which remains South
Africa’s favourite loyalty programme. We have made a number of improvements for customers in the
course of the year, including offering loyalty points and vouchers on till slips at the point of 
sale, introducing instant saver promotions and a smart shopper mobile application. We have issued 
almost eight million smart shopper cards and the number of customers who regularly use their card 
is growing steadily in response to our enhanced rewards programme.

We have supported our customers with good prices during the year, broadening our mix of promotions
and fighting inflation in core commodities by tailoring ranges and promotions to specific
communities. Our smart shopper programme provides us with valuable information in this regard, 
assisting us to tailor and target promotions where and when they will be most effective.

This is in line with our strategy to continue to invest in the shopping trip. Our gross profit
margin remains unchanged at 17.5%, with savings generated through improvements in supply-chain
efficiency being reinvested in our customer offer.

We are pleased with the progress made across our buying and distribution channels. We continue to
bring more suppliers into our central distribution channels, increasing the volume through our
distribution centres by 10.8% over the year, and reducing the cost per case delivered by 6.5%.
The benefits of our central distribution strategy are increasing, with improved efficiencies and
meaningful cost reductions across our supply chain, including removing four-days value of inventory
from our stock levels, providing our stores with strike-rates that are significantly better than
those of direct to store suppliers and improving overall availability by 2.4 percentage points.
We completed the centralisation of our buying, operational and finance support functions, removing
duplicate costs and services in the business. This process necessitated tough decisions during the
year and resulted in the retrenchment of some head office support staff. This was a difficult time
for the business, but the rigorous review of all support structures and processes has enabled us to
create a more streamlined and effective support office.

Outside South Africa we increased segmental revenue by 27.9% on a comparable basis and increased
our like-for-like segmental revenue by 9.4%. In the course of the year we took clear and decisive
action to close our Mauritius and Mozambique franchise operations. In both cases we reached a firm
conclusion that the businesses, as they were structured did not offer us a sound basis for sustainable
growth. However, the prospects are strong in the markets in which we continue to operate and further
afield. We have experienced good growth in Zambia, and have installed a team on the ground in
Nigeria to explore opportunities in that market.
We are proud of the leadership that Pick n Pay demonstrates as a responsible and caring corporate
citizen, whether it is supporting local charities and good causes in the communities we serve,
helping grow emerging market suppliers through our collaboration with the Ackerman Pick n Pay 
Foundation, or leading on seafood sustainability and climate change. The welfare and sustainability 
of the communities we serve is close to our hearts and has always been a key part of our approach.


Clear plan: more to do
We are encouraged by the progress shown across the business over the past year. Our strategic goal
remains that of sustainable customer-driven and sales-led growth, and the Group has more to deliver
in terms of improving our customer offer and winning more customers to Pick n Pay. We have a clear
plan in place across the Group, organised on the basis of a balanced scorecard comprising five
segments: our customer offer, our operations, the organisation of our people, our relationship with 
the communities we serve, and our financial performance. By delivering this plan, customers will
experience a better Pick n Pay. We will become more efficient and reduce our costs further. Staff 
will be part of a more effective organisation. We will as a result deliver better returns to our 
shareholders and an even stronger contribution to society and our broader stakeholders.


Financial review
Turnover
Group turnover increased by 7.7% to R63.1 billion (2013: R58.6 billion, with 6.2% comparable
growth). Like-for-like turnover growth was 2.7% (2013: 3.0%) and net new stores contributed 5.0%, 
with  our trading space growing a net 3.4% over the year. We showed stronger like-for-like growth 
at  overall point of sale level, with like-for-like till sales from both owned and franchise stores 
growing by 3.5%. Pick n Pay internal selling price inflation for the year was 5.3% (2013: 4.9%), 
against CPI inflation of 5.8%.


Gross profit
The Group has maintained the gross margin at 17.5%. We are pleased with the progress made across
our buying and distribution channels, which has resulted in improved efficiencies and meaningful 
cost reductions. In particular our two central distribution centres, at Longmeadow in Gauteng and
Philippi in the Western Cape, have both delivered considerable operating improvements which have 
reduced the net cost of distribution as a percentage of turnover. We have also demonstrated 
improved control over waste and shrink which are below the levels of the previous year. In addition, 
our new reporting platform is enabling improved gross margin management through the enhanced 
visibility  of more timely information. All the cost savings realised have been reinvested back 
into the selling price of goods, as part of our strategy of investing in the shopping trip.


Other trading income
Certain elements of trading income previously included under cost of merchandise sold (within
gross profit) have been reclassified and disclosed separately. This has been done to improve the
visibility of all other trading income, specifically commissions received. The prior year has been 
restated to align with the current year disclosures, please refer to note 7 of the summarised 
financial information presented below. The 3.5% decrease in other trading income is mainly due to 
reduced commissions as customers move away from purchasing airtime at the till to other digital 
platforms.


Trading profit
The trading profit margin improved from 1.3% to 1.6%. Expense control has been the key
differentiator in our improved performance this year, countering the modest turnover growth and 
continued investment in gross profit margin. Trading expenses as a percentage of turnover have 
decreased from 17.1% to 16.7%, with like-for-like expense growth almost flat at 0.8%. We are pleased 
with the good work being done around tighter fiscal control, with all areas of the business 
contributing to the expense savings.

The following are good examples of the achievements over the past year:
The increase in employee costs was limited to 7.6%, notwithstanding the new store growth.
Furthermore, like-for-like employee costs increased by only 3.2% despite a new above-CPI wage rate 
agreement which came into force at the beginning of the financial year. This demonstrates increased
productivity at store level, which is enabling us to staff our stores more efficiently and effectively.

Occupancy costs are up 7.6% in line with our store expansion programme; however the like-for-like
increase is only 2.6%. This is pleasing in light of the continued above-CPI regulatory increases 
in rates and taxes. We remain a tenant of choice in the retail industry and continue to negotiate
competitive rentals and escalation terms with our landlords.

Costs of operations are up 9.2%, again reflecting our opening of 80 company-owned stores during
the year, with a like-for-like increase in costs of 4.1%. Administered increases in electricity 
prices are posing a significant additional burden on operational costs. We are able to mitigate this 
to some degree: our electricity usage is well controlled, and we have an effective programme of 
reducing energy use in our stores. Amortisation and depreciation has increased by 5.9%, compared 
with the 10.8% growth seen in 2013, which illustrates the good work being done around the control 
of capital expenditure and ensuring the spend is targeted at improving the customer offer.

We are very pleased with the progress made on eliminating excess administrative costs in the
business, particularly at support office level. Merchandise and administration expenses have 
decreased by 14.8%, with a like-for-like decrease of 17.9%. We have almost entirely removed 
consultancy costs from the business. As South Africa’s largest acceptor of electronic tender, we 
have been subject to increased bank fees as our customers move from debit cards to hybrid cards. 
We are encouraged that the Reserve Bank has taken action to reduce bank interchange fees in respect 
of credit, debit and hybrid costs. The reduced fee schedule is expected to be in force from 
1 January 2015, with the benefits flowing in the 2016 financial year.

There is still a great deal of work to be done to optimise our cost structure and augment our
productivity and efficiency, but we are demonstrating that we can run a lower cost, more 
streamlined business.


Loss on capital items
The Group completed the centralisation of its buying, operational and finance support functions
during the year. As a result, systems and reporting tools previously developed to support the
decentralised business operation became obsolete, necessitating an impairment of R104.1 million 
of those intangible assets. The loss on capital items also includes a loss on the sale of fixed 
assets of R5.5 million, against a profit of R21.6 million in the prior year.


Interest
The net interest expense of R99.6 million is R11.1 million more than the prior year’s expense of
R88.5 million due to periods of elevated borrowings, particularly in the first half of the year, 
as a result of increased capital expenditure and inventory provisioning relating to new stores.


Earnings per share
Basic earnings per share (EPS) increased 6.3% from 57.03 to 60.61 cents per share. The new
52-week reporting calendar resulted in the current reporting period being four trading days less 
than the prior year. The comparable EPS growth (if the impact of 7.16 cents per share attributable 
to the additional trading days is excluded) is 21.5%.

Headline earnings per share (HEPS) increased 24.9% from 55.11 to 68.83 cents per share. The new
52-week reporting calendar resulted in the current reporting period being four trading days less
than the prior year. The comparable HEPS growth (if the impact of 7.16 cents per share attributable 
to the additional trading days is excluded) is 43.5%.

The significant difference in the growth in headline earnings per share against basic earnings per
share is the exclusion of profits and losses of a capital nature in the calculation of headline
earnings.

Capital losses net of tax of R42.5 million are added back to headline earnings in 2014 (mainly
comprising the impairment of intangible assets), against a deduction net of tax of R9.9 million 
of capital profits in 2013.


Financial position
                                                Sunday       Sunday   
                                               2 March      3 March   
                                                  2014         2013   
                                                    Rm           Rm   
  Inventory                                    3 979.8      3 996.5   
  Other current assets                         2 844.6      2 361.1   
  Cash and cash equivalents                    1 540.3      1 255.7   
  Bank overdraft and overnight borrowings       (670.0)    (1 525.6)  
  Other current liabilities                   (8 948.4)    (7 388.0)  
  Net working capital                         (1 253.7)    (1 300.3)  


We are pleased with the slight improvement in net working capital, particularly in the context of
the store expansion programme. Inventory has decreased by R16.7 million or 0.4%, with like-for-like
inventory (excluding the impact of new stores) decreasing by 5.7%. We have been focused on removing
slow-moving inventory lines from our business, rationalising our product range to provide our
customers with a more focused and relevant offering, as well as improving our supply chain 
efficiencies with improved strike rates to stores. We are pleased with our progress in this area, 
but there is still much work to be done. The increase in trade and other receivables of R480.0 million 
relates mainly to 12 net new franchise stores. The net cash and overnight borrowing position at 
year-end has improved by R1 140.2 million on last year, from negative R269.9 million to R870.3 million. 
The improved cash position is testament to the good work being done in respect of inventory management 
and improved fiscal control over both capital and operating expenditure. We raised an additional 
R300 million borrowing under our DMTN programme to capitalise on competitive interest rates in the 
capital markets.


Shareholder distribution
In line with our review of all aspects of the business, the Board of Pick n Pay Stores Limited moderated 
its annual dividend cover to 1.5 times headline earnings per share. As a results the final dividend of 37.10 cents per 
share brings the total dividend for the annual period to 44.30 cents per share, which is 8.6% up on last year.


Prospects
It has been a challenging but rewarding year and we are pleased with this overall result. We are
encouraged by the improved financial performance delivered and the progress demonstrated across all
areas of our business. Our business is stronger than it was a year ago. Customers and shareholders
are experiencing the benefit. Much work lies ahead in what is a difficult trading environment. We 
have a clear plan to improve the shopping trip for our customers, drive higher turnover growth, and
deliver further operating efficiencies and cost savings. We thank all our staff who have worked so 
hard over the past 12 months to improve our business and the lives of our customers.
             
Raymond Ackerman            
Chairman                   
14 April 2014


Dividend declarations
Pick n Pay Holdings Limited RF - Tax reference number: 9050/141/71/3
Number of shares in issue: 527 249 082
Notice is hereby given that the directors have declared a final gross dividend (number 65) of
37.10 cents per share out of income reserves.
The dividend declared is subject to dividend withholding tax at 15%.
There is no secondary tax on companies (STC) to be taken into account when determining the
dividend tax to withhold.
The tax payable is 5.565 cents per share, leaving shareholders who are not exempt from dividends
tax with a net dividend of 31.535 cents per share.


Dividend dates
The last day of trade in order to participate in the dividend (CUM dividend) will be Friday, 6
June 2014.
The shares will trade EX dividend from the commencement of business on Monday, 9 June 2014 and 
the record date will be Friday, 13 June 2014. The dividends will be paid on Tuesday, 17 June 2014.
Share certificates may not be dematerialised or rematerialised between Monday, 9 June 2014 and
Friday, 13 June 2014, both dates inclusive.

On behalf of the board of directors
Debra Muller
Company Secretary
14 April 2014


Consolidated statement of comprehensive income
for the period ended
                                                                                                                   
                                                                       364 days to                   368 days to   
                                                                           2 March                       3 March   
                                                                              2014        Change            2013   
                                                                                Rm             %              Rm   
  Revenue                                                                 63 661.9           6.4        59 833.0   
  Turnover                                                                63 117.0           6.5        59 271.3   
  Cost of merchandise sold                                              (52 077.1)           6.4      (48 935.9)   
  Gross profit                                                            11 039.9           6.8        10 335.4   
  Other trading income                                                       500.6         (3.5)           518.9   
  Trading expenses                                                      (10 532.4)           5.3      (10 003.8)   
  Employee costs                                                         (5 326.5)           7.6       (4 952.0)   
  Occupancy                                                              (1 613.9)           7.6       (1 500.5)   
  Operations                                                             (2 580.5)           9.2       (2 363.9)   
  Merchandising and administration                                       (1 011.5)        (14.8)       (1 187.4)   
                                                                                                                   
  Trading profit                                                           1 008.1          18.5           850.5   
  (Loss)/profit on sale of property, plant and equipment                     (5.5)                          21.6   
  Impairment loss on intangible assets                                     (104.1)                             -   
  Interest received                                                           44.3           3.5            42.8   
  Interest paid                                                            (143.9)           9.6         (131.3)   
  Share of associate’s income                                                 32.0          36.8            23.4   
  Profit before tax                                                          830.9           3.0           807.0   
  Tax                                                                      (249.4)         (3.4)         (258.3)   
  Profit for the period                                                      581.5           6.0           548.7   
  Other comprehensive income                                                                                       
  Items that will not be reclassified to profit or loss                                                            
  Remeasurement in retirement scheme assets                                   57.1                           1.4   
  Items that may be reclassified to profit or loss                                                                 
  Exchange rate differences on translating foreign operations                  6.4                           5.1   
  Other comprehensive income, net of tax                                      63.5                           6.5   
  Total comprehensive income for the period                                  645.0          16.2           555.2   
  
                                                                             Cents      Change %           Cents   
  Earnings per share                                                         60.61           6.3           57.03   
  Diluted earnings per share                                                 59.10           6.4           55.57   
  Headline earnings per share                                                68.83          24.9           55.11   
  Diluted headline earnings per share                                        67.13          25.0           53.70   


Consolidated statement of financial position                            
                                                                                           As at          As at   
                                                                                         2 March        3 March   
                                                                                            2014           2013   
                                                                                              Rm             Rm   
  ASSETS                                                                                                          
  Non-current assets                                                                                              
  Property, plant and equipment                                                          4 039.3        3 917.7   
  Intangible assets                                                                        987.6          947.9   
  Operating lease assets                                                                   132.8          105.5   
  Investment in associate                                                                  165.9          133.9   
  Participation in export partnerships                                                      25.1           28.1   
  Loans                                                                                     92.0           98.9   
  Retirement scheme assets                                                                  85.1            1.8   
  Deferred tax assets                                                                      212.1          174.4   
                                                                                         5 739.9        5 408.2   
  Current assets                                                                                                  
  Inventory                                                                              3 979.8        3 996.5   
  Trade and other receivables                                                            2 841.1        2 361.1   
  Cash and cash equivalents                                                              1 540.3        1 255.7   
  Derivative financial instruments                                                           3.5              -   
                                                                                         8 364.7        7 613.3   
  Total assets                                                                          14 104.6       13 021.5   
  EQUITY AND LIABILITIES                                                                                          
  Capital and reserves                                                                                            
  Share capital                                                                              6.6            6.6   
  Share premium                                                                            120.8          120.8   
  Treasury shares                                                                         (95.3)         (89.3)   
  Retained earnings                                                                      1 377.3        1 222.4   
  Foreign currency translation deficit                                                     (3.6)          (7.1)   
  Attributable to equity holders of the Company                                          1 405.8        1 253.4   
  Non-controlling interest                                                               1 290.6        1 157.4   
  Total shareholders’ interest                                                           2 696.4        2 410.8   
  Non-current liabilities                                                                                         
  Borrowings                                                                               747.1          772.5   
  Operating lease liabilities                                                            1 042.7          924.6   
                                                                                         1 789.8        1 697.1   
  Current liabilities                                                                                             
  Trade and other payables                                                               8 091.3        6 861.6   
  Bank overdraft and overnight borrowings                                                  670.0        1 525.6   
  Borrowings                                                                               737.8          431.5   
  Tax                                                                                      111.2           82.8   
  Provisions                                                                                 8.1            9.0   
  Derivative financial instruments                                                             -            3.1   
                                                                                         9 618.4        8 913.6   
  Total equity and liabilities                                                          14 104.6       13 021.5   
  Number of shares in issue - thousands                                                527 249.1      527 249.1   
  Weighted average number of shares in issue - thousands                               516 247.1      516 340.2   
  Diluted weighted average number of shares in issue - thousands                       521 495.3      521 533.0   
  Net asset value - cents per share (property value based on directors’ valuation)        605.49          506.5   


Consolidated statement of changes in equity
for the period ended 2 March 2014                
                                                                                                                        Foreign                                                    
                                                                                                                       currency                            Non-                    
                                                                       Share      Share    Treasury     Retained    translation                     controlling        Total       
                                                                     capital     pemium      shares     earnings        deficit        Total           interest       equity       
                                                                          Rm         Rm          Rm           Rm             Rm           Rm                 Rm           Rm       
  At 1 March 2012                                                        6.6      120.8      (82.4)      1 218.2          (9.9)      1 253.3            1 147.5      2 400.8       
  Total comprehensive income for the period                                -          -           -        295.3            2.7        298.0              257.2        555.2       
  Profit for the period                                                    -          -           -        294.5              -        294.5              254.2        548.7       
  Exchange rate differences on translating foreign operations              -          -           -            -            2.7          2.7                2.4          5.1       
  Remeasurement in retirement scheme assets                                -          -           -          0.8              -          0.8                0.6          1.4       
  Transactions with owners                                                 -          -       (6.9)      (291.1)            0.1      (297.9)            (247.3)      (545.2)       
  Dividends paid                                                           -          -           -      (315.0)              -      (315.0)            (268.5)      (583.5)       
  Share repurchases                                                        -          -      (10.5)       (31.4)              -       (41.9)             (36.0)       (77.9)       
  Net effect of settlement of employee share options                       -          -         3.6          9.8              -         13.4               11.5         24.9       
  Share options expense                                                    -          -           -         49.1              -         49.1               42.2         91.3       
  Movement in treasury shares                                              -          -           -        (3.6)            0.1        (3.5)                3.5            -       
                                                                                                                                                                                   
  At 3 March 2013                                                        6.6      120.8      (89.3)      1 222.4          (7.1)      1 253.4            1 157.4      2 410.8       
  Total comprehensive income for the period                                -          -           -        343.7            3.5        347.2              297.8        645.0       
  Profit for the period                                                    -          -           -        312.9              -        312.9              268.6        581.5       
  Exchange rate differences on translating foreign operations              -          -           -            -            3.5          3.5                2.9          6.4       
  Remeasurement in retirement scheme assets                                -          -           -         30.8              -         30.8               26.3         57.1       
  Transactions with owners                                                 -          -       (6.0)      (188.8)              -      (194.8)            (164.6)      (359.4)       
  Dividends paid                                                           -          -           -      (215.2)              -      (215.2)            (182.0)      (397.2)       
  Share repurchases                                                        -          -       (9.5)       (15.2)              -       (24.7)             (21.0)       (45.7)       
  Net effect of settlement of employee share options                       -          -         3.5          3.0              -          6.5                5.5         12.0       
  Share options expense                                                    -          -           -         38.6              -         38.6               32.9         71.5       
                                                                                                                                                                                   
  At 2 March 2014                                                        6.6      120.8      (95.3)      1 377.3          (3.6)      1 405.8            1 290.6      2 696.4       


Consolidated statement of cash flows
for the period ended
                                                                           364 days to    368 days to   
                                                                               2 March        3 March   
                                                                                  2014           2013   
                                                                                    Rm             Rm   
  Cash flows from operating activities                                                                  
  Trading profit                                                               1 008.1          850.5   
  Amortisation                                                                   199.3          145.8   
  Depreciation                                                                   749.1          749.7   
  Share options expense                                                           71.5           91.3   
  Movement in net operating lease liabilities                                     90.8           74.8   
  Movement in provisions                                                         (0.9)          (9.6)   
  Fair value adjustments                                                        (10.6)          (2.6)   
  Cash generated before movements in working capital                           2 107.3        1 899.9   
  Movements in working capital                                                   784.3        (998.0)   
  Movements in trade and other payables                                        1 229.7        (138.3)   
  Movements in inventory                                                          31.6        (626.0)   
  Movements in trade and other receivables                                     (477.0)        (233.7)   
                                                                                                        
  Cash generated by trading activities                                         2 891.6          901.9   
  Interest received                                                               44.3           42.8   
  Interest paid                                                                (143.9)        (131.3)   
  Cash generated by operations                                                 2 792.0          813.4   
  Dividends paid                                                               (397.2)        (583.5)   
  Tax paid                                                                     (270.2)        (311.6)   
  Cash generated by/(utilised in) operating activities                         2 124.6         (81.7)   
  Cash flows from investing activities                                                                  
  Investment in intangible assets                                              (289.2)        (242.4)   
  Investment in property, plant and equipment                                  (882.4)        (970.1)   
  Purchase of operations                                                       (103.3)        (118.3)   
  Proceeds on disposal of intangible assets                                       11.1            9.4   
  Proceeds on disposal of plant, property and equipment                           38.2          222.1   
  Loans repaid/(advanced)                                                          6.9         (17.7)   
  Cash utilised in investing activities                                      (1 218.7)      (1 117.0)   
  Cash flows from financing activities                                                                  
  Borrowings raised/(repaid)                                                     280.9        (260.5)   
  Share repurchases                                                             (45.7)         (77.9)   
  Proceeds from employees on settlement of share options                           1.3            2.9   
  Cash generated by/(utilised in) financing activities                           236.5        (335.5)   
  Net increase/(decrease) in cash and cash equivalents                         1 142.4      (1 534.2)   
  Cash and cash equivalents at beginning of period                             (269.9)        1 271.7   
  Effect of exchange rate fluctuations on cash and cash equivalents              (2.2)          (7.4)   
  Cash and cash equivalents at end of period                                     870.3        (269.9)   
  Consisting of :                                                                                       
  Cash and cash equivalents                                                    1 540.3        1 255.7   
  Bank overdraft and overnight borrowings                                      (670.0)      (1 525.6)   
                                                                                                        


Notes to the financial information
for the period ended 2 March 2014
  1.    BASIS OF PRESENTATION AND ACCOUNTING POLICIES
        The summary consolidated financial statements are prepared in accordance with the requirements 
        of the JSE Limited Listings Requirements for preliminary reports, and the requirements of the 
        Companies Act applicable to summary financial statements. The listings requirements require 
        preliminary reports to be prepared in accordance with the framework concepts and the measurement 
        and recognition requirements of International Financial Reporting Standards (IFRS) and the SAICA 
        Financial Reporting Guides as issued by the Accounting Practices Committee and Financial 
        Pronouncements as issued by Financial Reporting Standards Council and to also, as a minimum, 
        contain the information required by IAS 34 Interim Financial Reporting. The accounting policies 
        applied in the preparation of the consolidated financial statements from which the summary 
        consolidated financial statements were derived are in terms of International Financial Reporting 
        Standards and are consistent with those accounting policies applied in the preparation of the 
        previous consolidated financial statements, except for the change in financial period cut-off 
        date as disclosed in note 2 together with standards and amendments that became effective on 
        1 January 2013 namely: IFRS 10 Consolidated Financial Statements; IFRS 12 Disclosure of Interest 
        in Other entities; IFRS 13 Fair Value Measurement; IAS 19 Employee Benefits; IAS 1 Presentation of 
        Financial Instruments (effective 1 July 2012); IAS 28 Investments in Associates and Joint Ventures; 
        and IAS 36 Impairment of Assets (effective 1 January 2014 - early adopted) and those listed in 
        note 7. The standards and amendments have been applied for the first time in the Group’s financial 
        year commencing 4 March 2013 and, other than those listed in note 7, had no material impact on the 
        financial results. The summary consolidated financial statements have been audited by KPMG Inc., 
        whose unqualified report is available for inspection at the registered office of the Company. The 
        auditor's report does not cover the commentary (review of operations) at the beginning of this 
        summary consolidated financial statements and the corporate information, including the number of stores,
        at the end of this summary consolidated financial statements. Shareholders are therefore advised that in 
        order to obtain a full understanding of the nature of the auditor’s work, they should obtain a copy of 
        that report together with the accompanying financial information from the registered office of the Company. 
        The financial information included in this report has been prepared by the Finance Division under the 
        supervision of the Chief Finance Officer, Mr Bakar Jakoet CA(SA).   

  2.    CHANGE IN FINANCIAL PERIOD CUT OFF                   
        The Group implemented a 52-week financial reporting calendar in February 2013. The 52-week financial 
        reporting calendar reflects that turnover and gross profit is managed on a daily basis and is aggregated 
        into 52 trading weeks of 364 days. All other items included in profit before tax (other than those 
        included in gross profit) are managed on a calendar month basis and are not pro-rated to days or weeks.                                                                                                                                                                                               
        The profit for the year consists of 52 weeks of gross profit and 12 calendar months of other income and 
        trading expenses. As a result of this change, the 2014 annual financial period began on 4 March 2013 and 
        ended on 2 March 2014 (364 trading days). This compares to the 2013 financial period which ran from 
        1 March 2012 to 3 March 2013 (368 trading days). The 2013 financial period therefore included four extra 
        days of turnover and related gross profit. Other income and expenditure between the two years is comparable, 
        with both the 2014 and 2013 financial years reporting a full 12 calendar months of other income and trading 
        expenses.         
             
        The details and impact of the additional four days included in the comparative period is set out below. 
        The normalised 2013 result presented below excludes four days of turnover and gross profit relating to items 
        sold during 1 to 4 March 2012. The accounting policies applied in calculating the impact of the additional 
        trading days are consistent with those applied in the Group’s consolidated financial statements. The tax 
        rate applied is the effective tax rate relating to the relevant entities within the Group. The information 
        below has been prepared for illustrative purposes only and is the responsibility of the directors and because 
        of its nature, may not fairly present the financial position, changes in equity, results of operations or 
        cash flows. 


                                                                                           Normalised
                                                                                              trading 
                                                            Prior year                       calendar                
                                                          as published                    364 days to    
                                                           368 days to      Effect of         3 March     
                                                               3 March    new trading            2013     
                                                                  2013       calendar      (pro-forma)    
                                                                    Rm             Rm              Rm     
      Statement of comprehensive income                                                                 
      Revenue                                                 59 833.0        (663.8)        59 169.2   
      Turnover                                                59 271.3        (663.8)        58 607.5   
      Cost of merchandise sold                              (48 935.9)          563.1      (48 372.8)   
      Gross profit                                            10 335.4        (100.7)        10 234.7   
      Other trading income                                       518.9              -           518.9   
      Trading expenses                                      (10 003.8)              -      (10 003.8)   
      Trading profit                                             850.5        (100.7)           749.8   
      Profit on sale of property, plant and equipment             21.6              -            21.6   
      Interest received                                           42.8              -            42.8   
      Interest paid                                            (131.3)              -         (131.3)   
      Share of associate's income                                 23.4              -            23.4   
      Profit before tax                                          807.0        (100.7)           706.3   
      Tax                                                      (258.3)           30.7         (227.6)   
      Profit for the period                                      548.7         (70.0)           478.7   
      Statement of financial position                                                                   
      In the 52-week trading calendar the reporting period will always end on a Sunday. The current and comparative 
      period ended on similar days (2 March 2014 versus 3 March 2013) and therefore had no impact on the statement 
      of financial position.                                                  

  3.    RELATED PARTIES                                                             
        During the year, certain companies within the Group entered into transactions with each other. These 
        intra-group transactions are eliminated on consolidation. For further information please refer to the 
        2014 integrated annual report.    

  4.    SHARE CAPITAL 
                                                                               364 days to   368 days to   
                                                                                   2 March       3 March   
                                                                                      2014          2013   
                                                                                        Rm            Rm   
        Authorised                                                                                         
        800 000 000 (2013: 800 000 000) ordinary shares of 1.25 cents each            10.0          10.0   
        Issued                                                                                             
        527 249 082 (2013: 527 249 082) ordinary shares of 1.25 cents each             6.6           6.6   

                                                                                     000’s          000’s   
      The number of shares in issue at end of period is made up as follows:                                 
      Treasury shares held by the share trust                                      9 193.8        9 115.8   
      Treasury shares held by a subsidiary company                                 1 848.7        1 845.8   
                                                                                  11 042.5       10 961.6   
      Shares held outside the Group                                              516 206.6      516 287.5   
      Total shares in issue at end of period                                     527 249.1      527 249.1   
      In accordance with the memorandum of incorporation and under general authority, 92.3 million unissued shares 
      (17.5% of the issued shares) remain under the control of the directors to implement the terms and provisions 
      of the employee share schemes.                                 
      The holders of ordinary shares are entitled to receive dividends as declared and are entitled to one vote 
      per share at meetings of the Company.                                 
      Directors’ interest in shares                                                                         
                                                                                                            
                                                                               364 days to    368 days to   
                                                                                   2 March        3 March   
                                                                                      2014           2013   
                                                                                         %              %   
      Beneficial                                                                       0.9            1.0   
      Non-beneficial                                                                  50.6           50.4   
                                                                                      51.5           51.3   
      The directors’ interest in shares is their effective direct shareholding in the Company (excluding treasury shares).                                 

  5.    OPERATING SEGMENTS                                                                      
                                                         South                      Total       
                                                        Africa       Africa    operations       
                                                            Rm           Rm            Rm       
        2014                                                                                    
        Total segment revenue                         60 925.9      3 241.5      64 167.4       
        External revenue                              60 925.9      2 736.0      63 661.9       
        Direct deliveries*                                   -        505.5         505.5       
        Segment external turnover                     60 381.0      2 736.0      63 117.0       
        Profit before tax                                690.5        140.4         830.9       
        Other information                                                                       
        Statement of comprehensive income                                                       
        Interest received                                 40.1          4.2          44.3       
        Interest paid                                    143.5          0.4         143.9       
        Depreciation and amortisation                    923.1         25.3         948.4       
        Impairment loss on intangible assets             104.1            -         104.1       
        Share of associate’s income                          -         32.0          32.0       
        Statement of financial position                                                         
        Total assets                                  12 995.6      1 109.0      14 104.6       
        Total liabilities                             11 070.3        337.9      11 408.2       
        Additions to non-current assets                1 233.8         26.2       1 260.0       
        2013                                                                                    
        Total segment revenue                         57 951.1      2 577.3      60 528.4       
        External revenue                              57 951.1      1 881.9      59 833.0       
        Direct deliveries*                                   -        695.4         695.4       
        Segment external turnover                     57 389.4      1 881.9      59 271.3       
        Profit before tax                                714.3         92.7         807.0       
        Other information                                                                       
        Statement of comprehensive income                                                       
        Interest received                                 40.0          2.8          42.8       
        Interest paid                                    131.3            -         131.3       
        Depreciation and amortisation                    881.4         14.1         895.5       
        Share of associate’s income                          -         23.4          23.4       
        Statement of financial position                                                         
        Total assets                                  12 504.7        516.8      13 021.5       
        Total liabilities                             10 156.3        454.4      10 610.7       
        Additions to non-current assets                1 276.7         29.7       1 306.4       
        *  Direct deliveries are issues to franchisees directly by Group suppliers facilitated 
           through the Group’s supply chain, these are not included in revenue on the statement 
           of comprehensive income.                                                    

  6.    HEADLINE EARNINGS RECONCILIATION                                
                                                                                364 days to    368 days to   
                                                                                    2 March        3 March   
                                                                                       2014           2013   
        Basic earnings (profit for the period)                                        312.9          294.5   
        Adjustments:                                                                   42.5          (9.9)   
        Loss/(profit) on sale of property, plant and equipment                          3.0         (11.6)   
        Tax effect of (loss)/profit on sale of property, plant and equipment          (0.8)            1.7   
        Impairment of intangible assets                                                56.0              -   
        Tax effect of impairment of intangible assets                                (15.7)              -   
                                                                                                             
        Headline earnings                                                             355.4          284.6   
        Basic earnings (profit for the period)                                        312.9          294.5   
        Dilutive effect of share options                                              (4.7)          (4.6)   
        Diluted basic earnings                                                        308.2          289.9   
        Headline earnings                                                             355.4          284.6   
        Dilutive effect of share options                                              (5.3)          (4.5)   
        Diluted headline earnings                                                     350.1          280.1   

  7.    RECLASSIFICATIONS                                                                           
        Other trading income                                                                        
        During the period under review, trading income previously included under cost of merchandise sold has been 
        reclassified and disclosed separately. This has been done to improve visibility of all other trading income, 
        specifically commissions received. The prior year has been restated to align with the current year 
        disclosures.                                                                
                                                                                                    
                                                                                      368 days to     
                                                                                          3 March         
                                        364 days to    368 days to                           2013            
                                            2 March        3 March                  As previously   
                                               2014           2013     Adjustment          stated          
                                                 Rm             Rm            Rm               Rm              
        Other trading income                  500.6          518.9         174.5            344.4   
        Franchise fee income                  311.2          321.5          37.5            284.0   
        Operating lease income                 77.8           75.8          15.4             60.4   
        Commissions and other income          111.6          121.6         121.6                -   
                                                                                                    
        Provisions                                                                                  
        In order to improve disclosure, provisions previously included under trade and other payables are now presented 
        separately.  

  8.    FINANCIAL INSTRUMENTS                                                                       
       All financial instruments held by the Group are measured at amortised cost, with the exception of derivative financial 
       instruments and certain items included in trade and other payables. The latter is measured at fair value through profit 
       or loss, are categorised into level 2 of the fair value hierarchy and are considered to be immaterial. Level 2 is 
       defined as using inputs other than quoted prices that are observable for the asset or liability either directly 
       (as prices) or indirectly (derived from prices). The carrying value of all financial instruments approximate their 
       fair value.                                                                 


Number of stores
                                 3 March                        Converted    Converted    2 March   
                                    2013    Opened    Closed     openings     closings       2014   
  Company owned                                                                                     
  Pick n Pay                         420        51       (7)            2          (2)        464   
  Hypermarkets                        20         -         -            -            -         20   
  Supermarkets                       185        19       (4)            1           (1)       200   
  Clothing                            76        14       (2)            -            -         88   
  Liquor                             135        18        (1)           1           (1)       152   
  Pharmacy                             4         -         -            -            -          4   
  Boxer                              150        29       (7)            7            -        179   
  Superstores                        113         7       (3)            6            -        123   
  Hardware                            15         5        (1)           -            -         19   
  Liquor                              12        10       (2)            1            -         21   
  Punch                               10         7        (1)           -            -         16   
  Total company-owned                570        80      (14)            9          (2)        643   
  Franchise                                                                                         
  Pick n Pay                                                                                        
  Family                             262         8      (10)            1          (7)        254   
  Mini Market                         23         -        (1)           -            -         22   
  Daily                                1         -         -            -            -          1   
  Express                             17         4         -            -            -         21   
  Clothing                            13         1         -            -            -         14   
  Liquor                             105        18        (1)           1          (2)        121   
  Total franchise                    421        31      (12)            2          (9)        433   
  Total Group stores                 991       111      (26)           11         (11)      1 076   
  TM Supermarkets - associate         49         3         -            -            -         52   
  Total including associate        1 040       114      (26)           11         (11)      1 128   
  footprint outside SOUTH                                                                           
  africa (included in the numbers above)                                                                       
  Pick n Pay company-owned             5         3         -            -            -          8   
  Boxer company-owned                  5         -         -            -            -          5   
  Pick n Pay franchise                36         2       (5)            -            -         33   
  TM Supermarkets - associate         49         3         -            -            -         52   
  Total                               95         8       (5)            -            -         98   


Corporate information
 
Registered name
Pick n Pay Holdings Limited RF
Registration number: 1981/009610/06
JSE share code: PWK
ISIN: ZAE000005724

Registered office
Pick n Pay Office Park
101 Rosmead Avenue 
Kenilworth
Cape Town 7708

Telephone            +27 21 658 1000
Facsimile            + 27 21 797 0314

Postal address
PO Box 23087
Claremont 7735

Website
Pick n Pay: www.picknpay.co.za
Investor relations: www.picknpayinvestor.co.za

Registrar
Computershare Investor Services Proprietary Limited
70 Marshall Street
Johannesburg 2001

Postal address
PO Box 61051
Marshalltown 2107

Telephone  +27 11 370 5000
Facsimile  +27 11 688 5248

Sponsor
Investec Bank Limited
100 Grayston Drive
Sandton 2196

Company secretary
Debra Muller
email address: demuller@pnp.co.za

Board of directors
Non-executive 
RD Ackerman (Chairman), W Ackerman, GM Ackerman

Independent non-executive:
RP de Wet, HS Herman, J van Rooyen

Alternate
SD Ackerman-Berman, JG Ackerman, D Robins

Auditors
KPMG Inc.

Attorneys
Edward Nathan Sonnenberg

Date: 15/04/2014 07:06:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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